Trump Pauses Mexico Tariffs as Canada Talks Continue

Mexican President Claudia Sheinbaum and Donald Trump made the announcement after holding talks.

Mon Feb 03 2025
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WASHINGTON: United States President Donald Trump paused tariffs on Mexican goods for one month after last-minute talks Monday, but there was no breakthrough yet in negotiations with Canada on an issue that has sparked fears of a global trade war.

Trump and Mexican President Claudia Sheinbaum announced the delay in tariff implementation after holding talks.

As part of a series of agreements between the closely connected neighbours, Mexico will reinforce security along its border with the United States to fight drug trafficking, Sheinbaum announced.

“We had a good conversation with President Trump with much respect for our relationship and sovereignty,” Sheinbaum said on social media platform X.

“Mexico will immediately reinforce the northern border with 10,000 National Guard troops to prevent drug trafficking from Mexico to the United States, particularly fentanyl,” she said.

“The United States is committed to working to prevent the trafficking of high-powered weapons to Mexico,” she added.

Teams from the two countries would start working on Monday on the issues of security and trade, Sheinbaum said.  “Tariffs are paused for one month from now,” she added.

Trump also confirmed the suspension in a social media post and said his discussions with the Mexican leader had been “very friendly.” The two countries will negotiate during this one-month period, he added.

Trump said he had also spoken to Canadian Prime Minister Justin Trudeau on Monday and was due to speak again at 3:00 pm (2000 GMT) — but the White House said negotiations with Ottawa were not going as well.

Trump repeated his frequent claims that the United States is being unfairly treated by trade while pushing his argument that the tariffs were about a “drug war” from opioids “pouring through the Borders of Mexico and Canada.”

US government figures show that only a minimal quantity of drugs comes via Canada.

Trump on Saturday announced high tariffs on Mexico, Canada, and China due to a major threat from illegal immigration and drugs, prompting the Mexican president to vow retaliation.

Markets slump

Spiralling fears of a global trade war had earlier sent US, European, and Asian markets into a fall.

Wall Street stocks opened sharply lower, a European push lower was driven by Frankfurt and Paris with falls of around two percent, and Asian equity markets mostly slid by the close.

The Mexican peso and Canadian dollar also sank against the greenback, while oil jumped despite Trump limiting the levy on Canada’s energy imports at 10 percent to avoid a spike in fuel prices.

The White House said earlier there had been a “heck of a lot of talks” over the weekend — and that they had gone better with Mexico than Canada.

“This is not a trade war, this is a drug war,” National Economic Council Director Kevin Hassett told CNBC.

“The Mexicans are very, very serious about doing what President Trump said” in his order imposing the tariffs, he said. “But the Canadians appeared to have misunderstood the plain language.”

Canada has vowed to respond strongly to the tariffs.

Its most populous province Ontario on Monday banned US firms from bidding on tens of billions of dollars in government contracts — and dumped a deal with Elon Musk’s Starlink.

Musk is running a cost-cutting drive in Trump’s White House that, in a separate development, could shut down the US Agency for International Development.

“Ontario won’t do business with people hellbent on destroying our economy,” Ontario Premier Doug Ford said on X.

Trump has upped the pressure recently by calling Canada’s existence into question — calling again as recently as Sunday for it to become the 51st US state.

A little pain

The US president — who has said that tariff is the “most beautiful word in the dictionary” — is going even further in his second term on the levies than he did in his first.

He has insisted that the impact would be borne by foreign exporters without being passed on to American consumers, despite most experts saying the contrary.

ALSO READ: Trump Announces Talks with Canada, Mexico over Sweeping Tariffs

But the billionaire 78-year-old did acknowledge Sunday that Americans might feel economic “pain”.

“We may have short-term a little pain, and people understand that,” Trump told reporters as he returned to Washington on Sunday from a weekend at his Florida resort.

“But long term, the United States has been ripped off by virtually every country in the world.”

Trump has also wielded tariffs as a threat to achieve his wider policy goals, most recently when he said he would slap them on Colombia when it turned back US military planes carrying deported migrants.

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